May 12, 2020 / 10:47 AM / 20 days ago

UPDATE 1-Vietnam central bank to cut policy rates from Wednesday to boost growth

(Adds details and background)

By Khanh Vu and Phuong Nguyen

HANOI, May 12 (Reuters) - The State Bank of Vietnam announced a reduction in its policy rates, making a second cut in less than two months to help the economy weather the impact of the coronavirus pandemic.

With just 288 infections and no deaths, the Southeast Asian nation has seen no community infections for nearly a month, putting it on course to resume economic activity sooner than most others in the region.

The refinancing rate will be cut to 4.5% from 5% and the discount rate to 3% from 3.5%, effective Wednesday, the central bank said in a statement.

The rate cut is part of the government’s efforts to “help businesses to overcome difficulties and ensure social security amid the COVID-19 pandemic,” the central bank said in a statement posted on its website on Tuesday.

The central bank said it would also lower the caps on the interest rates of dong-denominated deposits from Wednesday, cutting by 0.3-0.5 percentage points, depending on the maturities.

Prime Minister Nguyen Xuan Phuc said last week Vietnam will try to keep its economic growth above 5% this year, backed by public investment, foreign direct investment, exports and domestic consumption.

Reporting by Khanh Vu and Phuong Nguyen; Editing by Andrew Heavens

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